In the UK, markets will receive the BRC September retail sales report, inflation data and September employment. In Europe, markets will receive CPI, German ZEW and the trade balance report.

Dr. Peter Müller from Commerzbank wrote in a research note that if global leaders can come up with a plan to stabilize markets over the weekend, European bond markets could sell off modestly. He added moves will be limited as the economy continues to weaken. He wrote he is not expecting yields for the 10-year Bund to move above 4%.

"The stabilization efforts being made by the world's key governments and central banks are initially expected to take some of the load off prices of Bunds," he wrote. "We recommend a neutral position for the week. However, we believe that there are greater opportunities for price gains at the short end of the Bund curve as expectations that the ECB will cut interest rates could increase."

With markets expecting more rate cuts from the ECB, economists from Capital Economics wrote in a research note that euro zone CPI data will lose some its importance. They added that although the second print will fall but remain above the ECB's 2% target.

"Even if inflation fears prevent further interest rate cuts in the immediate future, this will only mean that firmer action is required to support the ailing economy in 2009," they wrote. "We see interest rates falling to 2% by year-end - a far more aggressive profile than markets currently anticipate."

Looking at next week's data, economists from Capital Economics wrote that they are not expecting much good news as they expect German ZEW to continue to fall despite September's rise.

"The ECB's 50bp interest rate cut should have prevented a complete collapse in sentiment. But warnings that the cut might not be the first of a series will probably have reduced the positive impact. On balance, we expect the ZEW index to fall sharply, to near a record low of -60.0," they wrote.

Turning to the UK, Howard Archer, chief UK and European economist from Global Insight, wrote in a research note that although inflation is above the Bank of England's target, it is expected to fall due to a weakening economy.

"Prolonged very weak economic activity, faster rising unemployment and extended tight credit conditions will increasingly dilute underlying inflationary pressures," he wrote. "Meanwhile, the recent marked retreat in oil and commodity prices will obviously help matters, along with favourable base effects."

All times in EDT

Sunday:

The week starts with ECB Executive Board member Lorenzo Bini Smaghi speaking in Washington, D.C. following the G7 meetings.

7:45 EU ECB's Bini Smaghi Speaking in Washington

Monday:

The spotlight turns to the UK for September PPI data. Economists expect annualized core PPI to rise 6% following a prior gain of 6.4%. Monthly core PPI is expected to fall 0.1%, matching August's decline.

In addtional data, markets will receive the BRC retail sales report for September.

2:45 FR Current Account August Exp: €-4.0B Prior: €-3.8B

4:30 GB PPI Input (M/M) (SA) September Exp: -1.5% Prior: -2.0%

4:30 GB PPI Input (Y/Y) (NSA) September Exp: 19.8% Prior: 26.0%

4:30 GB PPI Output (M/M) (NSA) September Exp: -0.4% Prior: -0.6%

4:30 GB PPI Output (Y/Y) (NSA) September Exp: 8.8% Prior: 9.7%

4:30 GB PPI Output Core (M/M) (SA) September Exp: -0.1% Prior: -0.1%

4:30 GB PPI Output Core (Y/Y) (NSA) September Exp: 6.0% Prior: 6.4%

6:30 GB Bank of England's Sentance Makes Speech

8:00 EU Treasury's Kashkari Speaking in Washington at Banking Event

19:01 GB BRC September Retail Sales Monitor

19:01 GB RICS House Price Balance September Exp: -85.0% Prior: -81.0%

Tuesday:

It's an important day in Europe and the UK with the release of French CPI, German ZEW and UK CPI and RPI.

In the UK, headline CPI for September is forecasted to rise 0.4% following a 0.6% gain in August. Annualized CPI is expected to rise 5% following a previous rise of 4.7%.

Turning to Germany, the consensus is calling for German ZEW economic sentiment to come in at a reading of -60 in October following a previous reading of -40.9

Meanwhile, ECB President Jean-Claude Trichet will speak at an event in New York.

2:30 FR Bank of France Business Sentiment September Exp: 92 Prior: 94

2:45 FR CPI (M/M) September Exp: 0.0% Prior: 0.0%

2:45 FR CPI (Y/Y) September Exp: 3.1% Prior: 3.2%

2:45 FR CPI - EU Harmonised (M/M) September Exp: 0.0% Prior: -0.1%

2:45 FR CPI - EU Harmonised (Y/Y) September Exp: 3.4% Prior: 3.5%

2:45 FR CPI Ex Tobacco Index September Exp: 118.68 Prior: 118.64

4:00 IT CPI (NIC including tobacco) (M/M) September Final Exp: -0.3% Prior: -0.3%

4:00 IT CPI (NIC including tobacco) (Y/Y) September Final Exp: 3.8% Prior: 3.8%

4:00 IT CPI - EU Harmonized (M/M) September Final Exp: 0.3% Prior: 0.3%

4:00 IT CPI - EU Harmonized (Y/Y) September Final Exp: 3.7% Prior: 3.7%

4:30 GB CPI (M/M) September Exp: 0.4% Prior: 0.6%

4:30 GB CPI (Y/Y) September Exp: 5.0% Prior: 4.7%

4:30 GB Core CPI (Y/Y) September Exp: 2.0% Prior: 2.0%

4:30 GB Retail Price Index September Exp: 217.9 Prior: 217.2

4:30 GB RPI (M/M) September Exp: 0.5% Prior: 0.3%

4:30 GB RPI (Y/Y) September Exp: 4.9% Prior: 4.8%

4:30 GB RPI Ex Mortgage Interest Payments (Y/Y) September Exp: 5.4% Prior: 5.2%

4:30 GB DCLG UK House Prices (Y/Y) August Exp: -1.1% Prior: -0.3%

5:00 DE ZEW Survey (Economic Sentiment) October Exp: -51.1 Prior: -41.1

5:00 DE ZEW Survey (Current Situation) October Exp: -15 Prior: -1

5:00 EU ZEW Survey (Economic Sentiment) October Exp: -57.5 Prior: -40.9

5:00 EU Euro-Zone Industrial Production (M/M) (SA) August Exp: 1.2% Prior: -0.3%

5:00 EU Euro-Zone Industrial Production (Y/Y) (WDA) August Exp: -1.6% Prior: -1.7%

12:15 EU ECB's Trichet Speaking in New York

October 14 IT Bank of Italy Releases Aug. Public Finance Supplement

October 14 IT Bank of Italy Releases August Public Finance Supplement

Wednesday:

The highlight of the day will be euro zone CPI. Annualized core CPI is expected to rise 1.9%, matching August's 1.9% gain.

2:00 DE Consumer Price Index (M/M) September Final Exp: -0.1% Prior: -0.1%

2:00 DE Consumer Price Index (Y/Y) September Final Exp: 2.9% Prior: 2.9%

2:00 DE CPI - EU Harmonised (M/M) September Final Exp: -0.1% Prior: -0.1%

2:00 DE CPI - EU Harmonised (Y/Y) September Final Exp: 3.0% Prior: 3.0%

2:00 EU Euro zone 25 New Car Registrations September Prior: -15.7%

4:30 GB Claimant Count Rate September Exp: 2.9% Prior: 2.8%

4:30 GB Jobless Claims Change September Exp: 36.0K Prior: 32.5K

4:30 GB Average Earnings including bonus 3 month/(Y/Y) August Exp: 3.5% Prior: 3.5%

4:30 GB Average Earnings ex-bonus 3 month/(Y/Y) August Exp: 3.7% Prior: 3.7%

4:30 GB ILO Unemployment Rate (3 months) August Exp: 5.6% Prior: 5.5%

4:30 GB Manufacturing Unit Wage Cost 3 months/(Y/Y) August Prior: 1.9%

5:00 EU Euro-Zone CPI (M/M) September Exp: 0.1% Prior: -0.1%

5:00 EU Euro-Zone CPI (Y/Y) September Exp: 3.6% Prior: 3.6%

5:00 EU Euro-Zone CPI - Core (Y/Y) September 1.9% Prior: 1.9%

October 15 IT Bank of Italy Releases Quarterly Economic Bulletin

Thursday:

It's a light data day in Europe, but markets will be interested to hear what ECB Executive Board member Jose Manuel Gonzalez-Paramo has to say at an event in Santiago de Compostela, Spain.

2:00 EU EU's Almunia Speaks at Brussels Think Tank

4:00 IT Trade Balance August Exp: +€1300M Prior: +€2070.0M

4:00 IT Trade Balance Euro zone August Exp: +€600.0M Prior: +€3691.0M

5:00 IT Current Account August Prior: -€114.0M

11:30 EU Financial Services Commissioner McCreevy Speaks in Paris

14:00 EU ECB's Gonzalez-Paramo Speaking in Santiago de Compostela

Friday:

The week ends with euro zone trade balance for August, which is expected to show a deficit of €5.5 billion following July's deficit of €2.3 billion.

4:00 IT Industrial Orders (M/M) (SA) August Exp: -1.7% Prior: 2.6%

4:00 IT Industrial Orders (Y/Y) August Exp: -2.3% Prior: 5.5%

4:00 IT Industrial Sales (M/M) (SA) August Exp: 1.7% Prior: -2.5%

4:00 IT Industrial Sales (Y/Y) (NSA) August Prior: 4.7%

5:00 EU Euro-Zone Trade Balance August Exp: €-5.5B Prior: €-2.3B

5:00 EU Euro-Zone Trade Balance (SA) August Exp: €-5.4B Prior: €-6.4B

5:00 EU Construction Output (M/M) (SA) August Prior: 0.1%

5:00 EU Construction Output (Y/Y) (WDA) August

October 17 PT Bank of Portugal Releases Monthly Economic Indicators Report

By Neils Christensen, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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